Worldwide semiconductor revenue up 2.6% in 2016

Worldwide Semiconductor Revenue Grew 2.6 Percent in 2016, According to Final Results by Gartner

Worldwide semiconductor revenue totaled $343.5 billion in 2016, a 2.6 percent increase from 2015 revenue of $334.9 billion, according to final results by Gartner, Inc. The top 25 semiconductor vendors’ combined revenue increased 10.5 percent, a significantly better performance than the overall industry’s growth; however, most of this growth resulted from merger and acquisition (M&A) activity.

“The semiconductor industry rebounded in 2016, with a weak start to the year, characterized by inventory correction, giving way to strengthening demand and an improving pricing environment in the second half,” said James Hines research director at Gartner. “Worldwide semiconductor revenue growth was supported by increasing production in many electronic equipment segments, improving NAND flash memory pricing and relatively benign currency movements.”

Intel retained its No. 1 position as the largest semiconductor manufacturer and grew its semiconductor revenue 4.6 percent in 2016 (see Table 1). Samsung Electronics continued to maintain the No. 2 spot with 11.7 percent market share.

Table 1. Top 10 Semiconductor Vendors by Revenue, Worldwide, 2016 (Millions of Dollars)

2015  2016                                2016  2016 Market     2015   2015-2016
Rank  Rank  Vendor                     Revenue    Share (%)  Revenue  Growth (%)
----  ----  -------------------------  -------  -----------  -------  ----------
1     1     Intel Corp.                 54,091         15.7   51,690         4.6
2     2     Samsung Electronics         40,104         11.7   37,852         5.9
4     3     Qualcomm                    15,415          4.5   16,079        -4.1
3     4     SK hynix                    14,700          4.3   16,374       -10.2
17    5     Broadcom (formerly Avago)   13,223          3.8    4,543       191.1
5     6     Micron Technology           12,950          3.8   13,816        -6.3
6     7     Texas Instruments           11,901          3.5   11,635         2.3
7     8     Toshiba                      9,918          2.9    9,162         8.3
12    9     NXP Semiconductors           9,306          2.7    6,517        42.8
10    10    Media Tek                    8,725          2.5    6,704        30.1
            Others                     153,181         44.6  160,562        -4.6
                                       -------  -----------  -------  ----------
            Total Market               343,514          100  334,934         2.6

Source: Gartner (May 2017)

Consolidation continued to play a major role in the market share rankings, with several large companies growing through acquisitions. Merger and acquisition activity among the major vendors in 2016 included Avago Technologies’ acquisition of Broadcom Corp. to become Broadcom Ltd., On Semiconductor’s acquisition of Fairchild Semiconductor, and Western Digital’s acquisition of SanDisk. The largest mover in the top 25 was Broadcom Ltd., which moved up 12 places in the market share ranking.

“The combined revenue of the top 25 semiconductor vendors increased by 10.5 percent during 2016 and accounted for a 74.9 percent share, outperforming the rest of the market, which saw a 15.6 percent revenue decline,” said Mr. Hines. “However, these results are skewed by the large amount of M&A activity during 2015 and 2016. If we adjust for this M&A activity by adding the revenue of each acquired company to the revenue of the acquirer for both 2015 and 2016 where necessary, then the top 25 vendors would have experienced a 1.9 percent revenue increase, and the rest of the market would have increased by 4.6 percent.”

Gartner clients can learn more in the report: “Market Share Analysis: Semiconductors, Worldwide, 2016.”